Coinbase Wallet API Launches as a Service For Easy Web3 Adoption

    The complexity of setting up a crypto wallet has plagued the Web3 space and stood in its way of gaining wider adoption. Companies and brands are doing their best to work toward the next phase of the crypto bull market. Many projects are emerging like developing on-chain loyalty programs, providing blockchain integration services, and delivering decentralized ID systems. However, this doesn’t mean anything if the end-user faces the challenge of setting up a crypto wallet. Luckily, a Coinbase wallet API was launched by the renowned crypto exchange platform that will fix these major obstacles. 

    The Problem With Crypto Wallets Today

    First, we have to distinguish between custodial and non-custodial wallets. Custodial wallets are exchange generated. That means that platforms providing the wallet will take the responsibility of storing and managing assets away from users. However, this means that also the ownership of these funds also transfers to the third-party providers. This is the least secure type of wallet since users are trusting the middleman with their private keys.

    The non-custodial or self-custodial wallets are more secure since users are the sole owners of their private keys. However, the reason why we don’t see mass adoption of self-custodial wallets is that they are a hassle. 

    Setting up a self-custody wallet requires a certain level of understanding of how crypto actually works. They are infamous for their ease of use and require technical expertise. Regular users might make mistakes that can cost them to lose their crypto funds. 

    Custodial vs non custodial

    Coinbase Wallet API as a Solution 

    Coinbase acknowledged both custodial and non-custodial wallets and launched on March 8 a Wallet as a Service (WaaS) Solution. The exchange platform stated that users have struggled to set up wallets for their complexity, poor UIs, and long mnemonic seeds. And thus, companies have struggled to onboard users to the potential of Web3 technologies. 

    Wallet as a Service is a set of wallet infrastructure API toolkits that enables companies to deploy fully scalable, secure, and customizable on-chain wallets to their customers. Users can set up their own wallets through Web2 technologies as simple as a username and a password. Thus, removing the need for the complex seed phrase. This way, companies can launch on-chain wallets for simple user onboarding, loyalty programs, and in-game purchases. 

    “Today, companies are forced to push their users through confusing onboarding flows, often instructing users to download third-party self-custodial wallets,” Coinbase’s Web3 developer Parteick McGregor stated. “This context switching results in high drop-off rates during onboarding, meaning a company is never able to deliver its product to users.”

    So, Coinbase’s wallet API solution allows companies to integrate crypto wallets within their apps. Therefore, users won’t be redirected to other third-party applications to connect their wallets. 

    In addition, users would no longer have to manage complex recovery phrases for their wallets since the new WaaS is based on multi-party computation (MPC) cryptography technology. This technology allows multiple parties to communicate together by splitting a function without revealing their inputs to one another. 

    MPC-based wallets are generally more secure than others. This is because the private keys are split into multiple parts and distributed amongst parties. So, even if a user’s device gets compromised, the private keys are still securely stored with an automatic backup. 

    Coinbase MPC

    Wallet as a Service Features 

    Instead of developers navigating through the mazes of blockchain infrastructure looking for resources to integrate crypto wallets into apps, the Coinbase wallet API toolkit offers an easy and secure way to access Web3 wallet infrastructure. 

    • Seamless UX: WaaS provides the ease of creating, accessing, and restoring user wallets by just using a username and a password. 
    • High Security: The MPC technology provides an added layer of security for users’ wallets by encrypting private keys and distributing them across parties.
    • Full Ownership: Unlike custodial wallets, the Coinbase wallet API solution provides users with full control over their private keys. 
    • App Integration: Companies can integrate crypto wallets within their applications without needing third-party applications. 

    Web3 Adoption Is Near

    This is just one step of many solutions that emerged recently that has the goal of mass Web3 adoption. Some are still questioning whether Web3 is a real thing or just a hoax. However, the advancement in technologies such as MPC and the many projects dedicated to making decentralization a reality beg the difference. We are closer to making Web3 part of our daily lives than we might think.


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